Two types of mineralized deposits are recognized at the La Arena property – high-sulfidation epithermal gold deposits and porphyry-hosted copper-gold deposits. The epithermal gold deposits are hosted in sediments of the Lower Cretaceous Chimu Formation and the copper-gold deposit is hosed in Oligocene-age multi-stage intermediate intrusions.

Both deposits are characterized by alteration and mineralization occurrences as defined and described by Hedenquist (1987), Hedenquist and Lowenstern (1994), Arribas (1995) and Sillitoe (2010), among others. The epithermal gold deposit currently being mined is characterized by supergene oxidized high-sulfidation mineralization, which occurs in fractured sandstones and hydrothermal breccia zones. The porphyry deposit is dominated by primary copper sulfides with gold and lesser molybdenum.

High sulfidation epithermal gold deposits form in geothermal systems where hot acidic hydrothermal fluids emanate directly from an intrusive source and generally remain undiluted by ground water. As is the case at La Arena, these deposits often represent the upper parts of porphyry systems where the two types of mineralization often overlap. High-sulfidation deposits can display a wide variety of mineralization styles, including veins, hydrothermal breccias, stockwork, and disseminations or replacements.

In porphyry deposits, the sulfide ore minerals are dominantly structurally-controlled, with most mineralization occurring as close-spaced and cross-cutting vein stockwork, vein arrays, fractures, breccias and disseminations. In the hypogene portions of copper porphyry deposits, the copper occurs predominantly as chalcopyrite; other important copper ore minerals may include bornite and enargite. Supergene copper mineralization is generally dominated by chalcocite and lesser covellite.

The La Arena project area contains epithermal-style gold mineralization in sandstone-hosted oxidized fractures and breccia, and porphyry copper-gold (±molybdenum) mineralization. Both styles of mineralization are spatially and genetically linked as they likely emanated from the same residual magmatic activity related to intrusions of intermediate composition.

The mineralization at La Arena as currently defined extends over a length of 2.2 kilometers north-south and 1.1 kilometers east-west, with a vertical extent of mineralization in the porphyry exceeding 1,200 meters. Drilling in the porphyry has not defined the lower limits of mineralization, as analytical results from the deepest drill holes in the deposit do not indicated a decrease in copper and gold grades at depth.

High-Sulfidation Epithermal Gold Mineralization
Four separate zones of breccias containing anomalous gold have been recognized around the western and northern margins of the La Arena Porphyry, two of which have demonstrated economic viability. The Ethel oxide gold deposit was exhausted by the property’s previous owner, Rio Alto, who also initiated mining of the Calaorco oxide gold deposit; Tahoe continues operations at the Calaorco pit.

High-sulfidation epithermal gold mineralization currently being mined in the Calaorco open pit occurs partly in the Calaorco Breccia located at the contact between well-fractured Chimu quartz sandstones and the overlying intrusive, within un-brecciated fractured sandstones, and within the intrusive along its contact with the sediment package. Located to the north of the Calaorco open pit, the Ethel breccia is a similar but smaller oxidized epithermal gold deposit.

Gold mineralization is both lithologically and structurally controlled, and occurs primarily in silicified fractured sandstones and locally in hydrothermal breccias. Structural control is mainly associated to the principle northwestsoutheast Andean orientation and secondary to tensional fracturing, as well as to bedding planes. Tensional fracturing has acted as a principal fluid channel way, containing oxidized high sulfidation epithermal gold mineralization. Fine grained native gold is free in small proportions as is electrum.

The Calaorco breccia lies parallel to the contact between the Chimu sandstones and the porphyry. Gold mineralization occurs within the Calaorco breccia approximately 700 meters in length (southeast-northwest) with a slight deflection to the north at depth. The width of mineralization varies from 100 to 300 meters from the contact between sandstone and porphyry. Gold mineralization is most pronounced within the oxide zone, which can extend to depths of more than 250 meters below the surface.

Higher-grade zones of gold mineralization are directly controlled by the intersection of southwest-northeast faults which transverse the mineralized trend oriented to the northwest- southeast. The northwest-trending ‘feeder’ structures, locally termed Tilsa structures have a strike length of approximately 300 meters and thicknesses ranging from a few centimeters to several meters, with a grade of 80 to 100 g/t of gold not uncommon. Lower grade gold mineralization occurs as thin stockwork and disseminations within the Chimu sandstone.

Porphyry-hosted Copper-Gold Mineralization
Copper-gold mineralization is associated with phyllic (quartz-sericite) and potassic (secondary biotite + magnetite + potassium feldspar) alterations, which is dominated principally by pyrite and chalcopyrite with lesser amounts of bornite, covellite, chalcocite and molybdenite. Mineral zoning from surface downwards below the oxidized cap is typically about 40 to 50 meters for the zone of secondary enrichment (chalcocite + covellite ± copper oxides) and ten to 40 meters for the mixed oxide-sulfide transitional zone (chalcocite + chalcopyrite ± covellite). The top of the primary sulfide mineralized zone (chalcopyrite ± bornite) which predominates at La Arena is typically located at depths in excess of 100 meters from the surface.

The copper-gold porphyry at La Arena II comprises an elongated mineralized body approximately 1,400 meters in length (oriented northwest-southeast) and 200 to 400 meters wide. Mineralization occurs as disseminations along hairline fractures as well as within larger veins. Mineralization has been identified by drilling to depths of 1,000 meters below the surface which shows the porphyry to be narrowing, but with no decrease in copper and gold grades.

Sulfide mineralization consists of pyrite, chalcopyrite and molybdenite, with accessory pyrrhotite, sphalerite, galena, arsenopyrite, marcasite and rutile. Very fine (~25 microns) particles of native gold have been observed. The FPA-2 intrusion has the most abundant copper and gold mineralization that is associated with phyllic (quartz-sericite) and potassic (secondary biotite, magnetite, K feldspar) alteration with copper grades ranging from nil to locally greater than one percent; gold grades range from nil to locally greater than one gram per tonne. Lower grade copper-gold mineralization is related to the intra-mineral FPA-3 intrusion, which locally contains copper grades up to 0.5 percent and gold grades up to 0.5 grams per tonne.

The current operation has been mining the oxide deposit at the La Arena Mine since 2011. The operation is a conventional drill, blast, shovel and truck open pit run-of-mine (ROM) operation. Mining is carried out on two 12-hour shifts, operating 7 days a week under an alliance style contract with Peruvian contractors. The oxide ore is hauled directly from the pit to the leach facility or to stockpiles.

The La Arena Mine Calaorco open pit is mined by conventional truck and shovel methods. The mining fleet consists of 90 tonne class rock trucks and 10 m3 hydraulic shovels. Blasthole drilling is performed by diesel powered rotary single pass track drills.

The bench height is 8 meters. Double benching is applied with a catch bench 11 meters wide in sandstone and 12 meters wide in porphyry. Inter-ramp wall angles are 43.5° in sandstone and 37.0° in porphyry.

Ramps are constructed 25 meters wide including berms and ditches. Leach ore is direct hauled to the leach facility or to ore stockpiles.

All waste material is hauled to the waste rock storage facility located south of the Calaorco pit. Non-Acid-Generating (NAG) waste is used to encapsulate the Potentially Acid Generating (PAG) waste.

La Arena Mine is currently exploiting the oxide gold Mineral Reserves by open pit methods using conventional drill/blast, load and haul methods. Ore is truck dumped onto leach pads with no crushing or agglomeration required prior to leaching. La Arena S.A. reports average gold recovery of 86% to date.

Cyanide leach solution is applied by drip emitters at a rate of 0.175 kg per tonne of ore. Pregnant solution is collected in a 73,000 m3 pregnant solution pond, from which it is pumped to the ADR plant for gold recovery.

The ADR plant begins with 35 carbon adsorption columns, 2.82 m diameter by 3.75 m height that are operated in parallel in five circuits. Two other carbon columns, 2.1 m diameter by 2.7 m height, are run in series to scavenge gold from solution that is bled to the effluent treatment plant through the clarification circuit.

The target gold loading on carbon is 4,000 to 6,000 g per tonne. When this target is reached, the loaded carbon is pu ........